Questions
Exercise 19-7 Income reporting under absorption costing and variable costing LO P2 [The following information applies...

Exercise 19-7 Income reporting under absorption costing and variable costing LO P2

[The following information applies to the questions displayed below.]

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

Sales price per unit $ 330 per unit
Units produced this year 110,000 units
Units sold this year 113,500 units
Units in beginning-year inventory 3,500 units
Beginning inventory costs
Variable (3,500 units × $130) $ 455,000
Fixed (3,500 units × $75) 262,500
Total $ 717,500
Manufacturing costs this year
Direct materials $ 46 per unit
Direct labor $ 70 per unit
Overhead costs this year
Variable overhead $ 3,200,000
Fixed overhead $ 7,400,000
Selling and administrative costs this year
Variable $ 1,400,000
Fixed 4,400,000

1. Prepare the current-year income statement for the company using variable costing.

In: Accounting

select one of the following types of businesses: Custom home builder Auto repair shop Accounting firm...

select one of the following types of businesses:

  • Custom home builder
  • Auto repair shop
  • Accounting firm
  • Lawn service company
  • Television show production

Describe how your chosen business might use Managerial Accounting to support internal AND external Stakeholders.

In: Accounting

The total equity of the business is P500, 000. Owner’s equity is P400, 000. Plant and...

The total equity of the business is P500, 000. Owner’s equity is P400, 000. Plant and Equipment is 45% of total Assets, the total current assets is

Select one:

a. P225, 000

b. P220, 000

c. P275, 000

d. P100,000

Mr. A has the following revenue transactions during April of the current year: Rendered services: Cash, P5, 000 & on credit, P3, 500; received P5000 advance payment for services to be rendered in May. The amount of income to be recognized in April is

Select one:

a. P5,000

b. P13,500

c. P10,000

d. P8,500

Odd-man out: Select the word that does not belong to the group.

Select one:

a. Balance Sheet

b. Statement of Cash Flow

c. Worksheet

d. Income Statement

The company's performance for a given accounting period is measured and evaluated through the income statement.

Select one:

True

False

Odd-man out: Select the word that does not belong to the group.

Select one:

a. Factory Insurance

b. Depreciation of Delivery Equipment

c. Salaries of factory supervisor

d. Factory Supplies

In: Accounting

QuickBooks Project Prepare a Trial Balance for a Company for Jan. given the following information Jan...

QuickBooks Project

Prepare a Trial Balance for a Company for Jan. given the following information

Jan 1, 2019 Began business by depositing $7,000 in a bank account in the name of the company, in exchange for 7,000 shares of $1 par value common stock
Jan 2, 2019 Ordered supplies, $800
Jan 2, 2019 Borrowed $12,000 from the bank that is due in 2 years at 10%
Jan 3, 2019

Purchased equipment for cash $4,000

Jan 4, 2019 Made two months' rent payment on the store, $2,000
Jan 7, 2019 Received supplies ordered on Jan 2 and agreed to pay half on the amount in 10 days and the rest in 30 days
Jan 8, 2019 Purchased merchandise inventory on account, $7,000
Jan 9, 2019 Paid for advertising to announce the grand opening, $7,000
Jan 12, 2019 Grand opening
Jan 17, 2019 paid half the amount owed on the supplies purchased on Jan 7.
Jan 19, 2019 weekly sales of $3,000, merchandise costing $2,000, half cash and half on account
Jan 26, 2019 Received payment on account $700
Jan 26, 2019

Weekly cash sales of $4,500, merchandise costing $2,000, half cash and half on account

Jan 31, 2019

Received utility bill for January, $300

Jan 31, 2019 one month's rent expired
Jan 31, 2019

accrued one month's interest, $100

Jan 31, 2019 Depreciation expense for the month is $100
Jan 31, 2019 The income tax rate is 30%

Here is a list of the accounts the company uses:

Account Type
Cash Bank
Accounts receivable

other current asset

merchandise inventory other current asset
prepaid rent other current asset
supplies other current asset
equipment Fixed asset
equipment - accum Depr Fixed asset
Accounts payable other current liability
Income taxes payable other current liability
payroll liabilities other current liabilities
notes payable long term liabilities
common stock equity
income summary equity
retained earnings equity
sales income
cost of goods sold cost of goods sold
advertising expense expense
depreciation expense expense
income tax expense expense
payroll expense expense
rent expense expense
supplies expense expense
utility expense expense

In: Accounting

How does one determine whether a warranty constitutes a separate performance obligation within a contract? Please...

How does one determine whether a warranty constitutes a separate performance obligation within a contract?

Please be as thorough and as descriptive as possible.

In: Accounting

Outsourcing business function is a vital part, though outsourcing social media marketing\ digital marketing, is a...

Outsourcing business function is a vital part, though outsourcing social media

marketing\ digital marketing, is a very easy task to learn. The companies outsource it

without thinking how to grasp the knowledge themselves. What measures can be taken

to make it more cost-effective in this regard?

in simple words: why outsourcing social media marketing/digital marketing is bad for businesses?? and why should businesses need to treat social media marketing as a core business process?

In: Accounting

Dunnes Stores has two service department, Advertising and Administration, and two operating departments, Hardware and Automotive....

Dunnes Stores has two service department, Advertising and Administration, and two operating departments, Hardware and Automotive. Sales, COGS, and direct expenses are given below. Complete the following table, including allocation of $220,000 of indirect costs. Indirect costs are allocated on the basis of square footage:Advertising Department:750 square feet, Administration Department:1,500 square feet, Hardware Department:3,000 square feet, Automotive Department:9,750 square feet

Dunnes Stores

Revenues and Expenses

Y/E December 31, 2018

Service Departments

Operating Departments

Totals

Advertising

Admin

Hardware

Automotive

Sales

      1,500,000

$675,000

$825,000

COGS

         375,000

100,000

275,000

Direct Expenses

         275,000

50,000

100,000

50,000

75,000

Indirect Expenses

         220,000

Totals

Allocated Service Dept. Expenses

Dept. Name

Dept. Name

Total Expenses Allocated to Operating Depts.

Use the table above to allocate the service department expenses to the operating departments. Advertising Costs are allocated on the basis of number of advertisements in each department. Hardware had 60 ads and Automotive had 90. Administrative costs are allocated on the basis of sales. Complete the following Departmental Income Statement

Dunnes Stores

Departmental Income Statement

Y/E December 31, 2018

Hardware

Automotive

Combined

Sales

Cost of Goods Sold

Gross Profit

Operating Expenses

Direct Expenses

Indirect Expenses

Share of Advertising Expenses

Share of Admin Expenses

Total Operating Expenses

Operating Income (Loss)

Complete the following Income Statement showing Departmental Contribution to Overhead

Dunnes Stores

Income Statement Showing Departmental Contribution to Overhead

Y/E December 31, 2018

Hardware

Housewares

Combined

Sales

Cost of Goods Sold

Gross Profit

Direct Expenses

Departmental Contribution to Overhead

Indirect Expenses

Share of Advertising Expenses

Share of Administrative Expenses

Total Operating Expenses

Operating Income (Loss)

In: Accounting

The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication...

The management of Firebolt Industries Inc. manufactures gasoline and diesel engines through two production departments, Fabrication and Assembly. Management needs accurate product cost information in order to guide product strategy. Presently, the company uses a single plantwide factory overhead rate for allocating factory overhead to the two products. However, management is considering the multiple production department factory overhead rate method. The following factory overhead was budgeted for Firebolt:

1

Fabrication Department factory overhead

$561,600.00

2

Assembly Department factory overhead

241,500.00

3

Total

$803,100.00

Direct labor hours were estimated as follows:

Fabrication Department 4,800 hours
Assembly Department 5,250
Total 10,050 hours

In addition, the direct labor hours (dlh) used to produce a unit of each product in each department were determined from engineering records, as follows:

Production Departments Gasoline Engine Diesel Engine
Fabrication Department 3.1 dlh 1.8 dlh
Assembly Department 1.8 3.1
Direct labor hours per unit 4.9 dlh 4.9 dlh
Required:
a. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the single plantwide factory overhead rate method, using direct labor hours as the activity base.*
b. Determine the per-unit factory overhead allocated to the gasoline and diesel engines under the multiple production department factory overhead rate method, using direct labor hours as the activity base for each department.*
c. (1) Recommend to management a product costing approach, based on your analyses in (a) and (b). (2) Give a reason for your answer.
*If required, round all per-unit answers to the nearest cent.

In: Accounting

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The...

Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter:

  1. As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances:

Cash $

62,000

Accounts receivable

217,600

Inventory

61,050

Buildings and equipment (net)

372,000

Accounts payable $

91,725

Common stock

500,000

Retained earnings

120,925

$

712,650

$

712,650

  1. Actual sales for December and budgeted sales for the next four months are as follows:

December(actual) $

272,000

January $

407,000

February $

604,000

March $

319,000

April $

215,000

  1. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at December 31 are a result of December credit sales.

  2. The company’s gross margin is 40% of sales. (In other words, cost of goods sold is 60% of sales.)

  3. Monthly expenses are budgeted as follows: salaries and wages, $37,000 per month: advertising, $59,000 per month; shipping, 5% of sales; other expenses, 3% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $45,620 for the quarter.

  4. Each month’s ending inventory should equal 25% of the following month’s cost of goods sold.

  5. One-half of a month’s inventory purchases is paid for in the month of purchase; the other half is paid in the following month.

  6. During February, the company will purchase a new copy machine for $3,200 cash. During March, other equipment will be purchased for cash at a cost of $81,000.

  7. During January, the company will declare and pay $45,000 in cash dividends.

  8. Management wants to maintain a minimum cash balance of $30,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:

Using the data above, complete the following statements and schedules for the first quarter:

1. Schedule of expected cash collections:

2-a. Merchandise purchases budget:

2-b. Schedule of expected cash disbursements for merchandise purchases:

3. Cash budget:

4. Prepare an absorption costing income statement for the quarter ending March 31.

5. Prepare a balance sheet as of March 31.

In: Accounting

blake closed his business on april 1 2018 he had no carrryovers losses and all assets...

blake closed his business on april 1 2018 he had no carrryovers losses and all assets were fully depreciated if blake elects to use the office in home simplified method what amount of his schedule c net profit or loss

In: Accounting

Now assume that Temp Force's dividend is expected to experience nonconstant growth of 30% from year...

Now assume that Temp Force's dividend is expected to experience nonconstant growth of 30% from year 0 to Year 1, 25% from Year 1 to Year 2, and 15% from Year 2 to Year 3. After Year 3, dividends will grow at a constant rate of 6%. What is the stocks intrinsic value under these conditions? What are the expected dividend yield and capital gains yield during the first year? What are the expected dividend yield and capital gains yield during the fourth year (from Year 3 to Year 4)?

Dividends
D0 2 $       2.00
D1 2*(1.30) $       2.60
D2 2.6*(1.25) $       3.25
D3 3.25*(1.15) $       3.74
Rs 13%
g 6%
Expected Dividend Yield 7%
Capital Gain Yield 6%
Total Return 13%
Expected Rate of Return 13%

In: Accounting

Now why is it important from an accounting perspective to classify a lease into operating or...

Now why is it important from an accounting perspective to classify a lease into operating or capital lease? What is the criteria to classify the lease into operating and capital lease ? Do you think the lessee tends to prefer an operating lease or a capital lease? Why?

In: Accounting

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services,...

Gallatin Carpet Cleaning is a small, family-owned business operating out of Bozeman, Montana. For its services, the company has always charged a flat fee per hundred square feet of carpet cleaned. The current fee is $23.60 per hundred square feet. However, there is some question about whether the company is actually making any money on jobs for some customers—particularly those located on remote ranches that require considerable travel time. The owner’s daughter, home for the summer from college, has suggested investigating this question using activity-based costing. After some discussion, she designed a simple system consisting of four activity cost pools. The activity cost pools and their activity measures appear below: Activity Cost Pool Activity Measure Activity for the Year Cleaning carpets Square feet cleaned (00s) 7,500 hundred square feet Travel to jobs Miles driven 394,000 miles Job support Number of jobs 1,800 jobs Other (organization-sustaining costs and idle capacity costs) None Not applicable The total cost of operating the company for the year is $363,000 which includes the following costs: Wages $ 138,000 Cleaning supplies 28,000 Cleaning equipment depreciation 15,000 Vehicle expenses 40,000 Office expenses 68,000 President’s compensation 74,000 Total cost $ 363,000 Resource consumption is distributed across the activities as follows: Distribution of Resource Consumption Across Activities Cleaning Carpets Travel to Jobs Job Support Other Total Wages 77 % 11 % 0 % 12 % 100 % Cleaning supplies 100 % 0 % 0 % 0 % 100 % Cleaning equipment depreciation 75 % 0 % 0 % 25 % 100 % Vehicle expenses 0 % 84 % 0 % 16 % 100 % Office expenses 0 % 0 % 56 % 44 % 100 % President’s compensation 0 % 0 % 31 % 69 % 100 %

Required:

1. Prepare the first-stage allocation of costs to the activity cost pools.

2. Compute the activity rates for the activity cost pools.

3. The company recently completed a 800 square foot carpet-cleaning job at the Flying N ranch—a 53-mile round-trip journey from the company’s offices in Bozeman. Compute the cost of this job using the activity-based costing system.

4. The revenue from the Flying N ranch was $188.80 (800 square feet @ $23.60 per hundred square feet). Calculate the customer margin earned on this job.

In: Accounting

Sales revenue                                        &n

Sales revenue                                                               $5,625,000

Variable manufacturing expense                  1,875,000

Variable selling and admin expense                 625,000

Fixed manufacturing expense                      1,000,500

      

Fixed selling and administrative expense        562,000

Total Expenses                                                             (4,062,500)

Net operating income                                                    $ 1,562,500

Company produced and sold 625,000 units of products.

Requirements:

  1. Compute Break-even point in unit and explain what that number means.
  2. Compute Break-even point in dollar sales volume and explain what that number means.
  3. If company want to have a pretax profit of $2,000,000, how much they should sell in dollar amount? Explain that number

In: Accounting

CREATE A  Statement of Earnings, Statement of Retained Earnings, Statement of Financial Position, Journal Entries for January...

CREATE A  Statement of Earnings, Statement of Retained Earnings, Statement of Financial Position, Journal Entries for January 2019:

Post-Closing Trial Balance

December 31, 2018

Debit

Credit

Cash

     18,200

Accounts receivable

       3,960

Supplies

       1,380

Prepaid insurance

          750

Prepaid rent

       3,800

Furniture

       5,000

Accumulated depreciation, furniture

          450

Equipment

       8,000

Accumulated depreciation, equipment

       4,000

Accounts payable

       2,700

Accrued liabilities

          190

Unearned service revenue

       1,900

Common shares

     20,000

Retained earnings

     11,850

Total

     41,090

     41,090

Business Activities for January, 2019

  1. On January 4, 2019, Linda paid the outstanding accounts payable balance from December 31, 2018.
  2. On January 6, 2019, Linda withdrew $2,000 in the form of a dividend.
  3. Additional supplies were purchased, on account, on January 10 for $280. At January 31 there were $1,200 supplies left on hand.
  4. A 12-month insurance policy was purchased on June 1, 2018, for $1,800. Linda recorded appropriate adjustments for 2018 year-end statements.
  5. Linda paid 3 months rent, in advance, on December 1, 2018, to obtain a discount.  She appropriately recorded the use of the rent for December in her 2018 financial statements.
  6. On January 12 Linda paid $190 for cell services in December which she had appropriately accrued on December 31, 2018.  Linda has not received the invoice for cell use in January, 2019, yet but she estimates it will be $175.  She will not pay it until later in February.  Linda uses a Utilities Expense account to record cell costs.
  7. Linda charges $100 per person for each tour, which includes a full day tour, lunch, and admission to 2 museums.  If a group (greater than 10 people) books a tour they get a 10% discount and are given 30 days after the tour to pay.  
  8. Two groups who had taken tours in December paid their outstanding accounts receivable balances, a total of $3,960, on January 18, 2019.
  9. During January a total of 117 individuals paid cash for tours.  
  10. Also, in January Linda ran tours for 2 groups. There were 25 people in each group. One group paid on January 29 and Linda expects the other group to pay their outstanding account in February. Both groups were given the 10% discount.   
  11. Some groups request special tours that they pay for in advance.  Special tours do not receive any discounts.  Linda had received an advance payment of $1,900 in December, 2018.  On January 8 Linda ran the special tour.
  12. In addition, on January 25, one company paid cash and booked a special tour for 28 of their employees, paying $130 per person. The tour will take place on February 12.
  13. New office furniture was purchased on July 1, 2018, when Linda moved into her current office space.  The furniture is expected to last for 5 years and have a residual value of $500.  Linda uses the straight-line method to record depreciation.
  14. Linda videos all the tours and emails a copy to customers so they can remember how much fun they had.  Linda purchased her video equipment on January 1, 2018, for $8,000 and depreciated it over 2 years using straight-line depreciation.  On January 1, 2019, Linda sold the old equipment for $3,000 cash.
  15. Also, on January 1, 2019, Linda purchased new video equipment for $6,000 cash.  She started using the new equipment immediately.  It will be depreciated on a straight-line basis over 2 years and has an expected residual value of $1,200.
  16. Linda uses special double-decker tour buses, which she rents, to conduct the tours.  She paid $7,700 cash for bus rentals on January 25 but she still owes the bus company $1,900 with regards to her January invoice.  She plans to pay that amount in February.
  17. Linda tells you that the company records monthly adjusting entries and that her tax rate is 25%.   She will pay her income taxes on her January income in February 2019.

In: Accounting